Q.Rekha Garments has received an order to export 2000 men’s trousers to Swift Imports Ltd., located in Australia. Discuss the procedure that Rekha Garments would need to go through for executing the export order.

Rekha Garments must: receive the order (indent) and send a proforma invoice; check Swift Imports' creditworthiness and obtain a letter of credit; get an export licence (RBI-authorised bank account, IEC number from DGFT, RCMC, ECGC registration); arrange pre-shipment finance; produce the 2000 trousers; get pre-shipment inspection and excise clearance; obtain a certificate of origin; reserve shipping space; pack, mark and forward the goods; insure them; complete customs clearance (shipping bill); obtain the mate's receipt; pay freight and get the bill of lading; prepare the invoice; and secure payment through the bank (negotiation of documents). …

The typical export procedure Rekha Garments would follow:

1. Receipt of order (indent) — Rekha Garments receives the order from Swift Imports describing the goods (2000 men's trousers), prices, delivery terms, and packing and marking details. (Earlier, it would have sent a quotation called a proforma invoice stating price, quality, size, weight, mode of delivery, packing and payment terms.)

2. Assessing creditworthiness and securing payment guarantee — It enquires into Swift Imports' creditworthiness to judge the risk of non-payment, and asks for a letter of credit — a guarantee from Swift Imports' bank to honour the bills up to a stated amount (the most secure method of payment).

3. Obtaining an export licence — Rekha Garments ensures it has: a bank account with an RBI-authorised bank; an Import Export Code (IEC) number from the DGFT; registration with the appropriate export promotion council (Apparel Export Promotion Council) for a Registration-cum-Membership Certificate (RCMC); and registration with the ECGC to guard against non-payment risk.

4. Obtaining pre-shipment finance — With the order and letter of credit in hand, it approaches its banker for pre-shipment finance to procure fabric, process, stitch, pack and transport the trousers to the port.

5. Production/procurement of goods — It produces (or procures) the 2000 trousers to Swift Imports' specifications.

6. Pre-shipment inspection — If garments are notified for compulsory inspection under the Export (Quality Control and Inspection) Act, 1963, it obtains an inspection certificate from the Export Inspection Agency (unless exempt as an export house/EOU etc.).

7. Excise clearance — It applies to the Excise Commissioner with an invoice for excise clearance on materials used; often exempt or later refunded as duty drawback.

8. Certificate of origin — If Australia offers tariff concessions, it obtains a certificate of origin (from the trade consulate) proving the trousers were made in India.

9. Reservation of shipping space — It applies to the shipping company for space, giving details and destination (Australia); the company issues a shipping order.

10. Packing and forwarding — The trousers are properly packed and marked (importer's name/address, gross and net weight, ports, country of origin) and transported to the port; a railway receipt is issued and endorsed to its agent.

11. Insurance of goods — It gets the consignment insured against loss/damage from the perils of the sea in transit.

12. Customs clearance — It prepares a shipping bill (the main document for export permission) and submits five copies to the Customs Appraiser with the export order, letter of credit, commercial invoice, certificate of origin, inspection certificate and marine insurance policy; a carting order is obtained. These tasks are usually entrusted to a Clearing & Forwarding (C&F) agent.

13. Obtaining the mate's receipt — Once the cargo is loaded, the ship's mate issues a mate's receipt, handed to the C&F agent on payment of port dues. …